Volkswagen Golf VII: Launch of a new era Prof. Dr. Martin Winterkorn, Chairman of the Board of Management Hans Dieter Pötsch, Member of the Board of Management Volkswagen Aktiengesellschaft Sardinia, 8 October 2012 Disclaimer
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2 Volkswagen Golf VII: Launch of a new era Prof. Dr. Martin Winterkorn Chairman of the Board of Management, Volkswagen Aktiengesellschaft Sardinia, 8 October 2012 The new Golf
4 Strategy 2018: Sustainable growth and profitability
Top customer satisfaction & quality
Volkswagen Group Return on Top Vision: the world’s most profitable, sales before tax employer fascinating and sustainable automobile > 8% manufacturer
Unit sales > 10 million vehicles
5 Volkswagen Group – built on three strong pillars1)
Automotive Division Financial Services Division Commercial Vehicles, Passenger Cars Volkswagen Financial Services Power Engineering
Europe / Asia-Pacific / North- and South America
Financial Services
USA / Canada / Spain / Argentina
Scania Financial Services 2) 3) MAN Financial Services Porsche Holding Financial Services
Remaining companies Porsche Financial Services
1) Organisational structure of Volkswagen Group as from 1 September 2012; reporting structure as from Q1 2013 report 3) Consolidated as from 19 July 2012 2) Fully consolidated as from 1 August 2012 6 Substantial growth opportunities1)
Cars and Light Commercial Vehicles Trucks (>6t) World market growth 2011-2018 (million units) World market growth 2011-2018 (million units)
+36% +55% 103.1 4.3
87.4 3.5 75.6 2.8
2011 2014 2018 2011 2014 2018
1) Source: IHS Global Insight (data status: September 2012), rounded 7 Volkswagen Group – Deliveries to customers by brands1) January to September 2012 vs. 2011
´000 units January to September 2011 +10.6% January to September 2012 8,000 6,802 7,000 6,152 6,000 +10.5% 5,000 4,209 3,811 4,000
3,000 +12.8% 2,000 +7.9% -10.7% +4.9% 973 1,098 +24.4% 1,000 665 717 267 390 409 238 23 56 0 Volkswagen Volkswagen Audi ŠKODA SEAT Porsche Bentley VW Commercial Group Passenger Cars (since 08/2012) Vehicles
1) Preliminary figures incl. Scania (Jan – Jun) and MAN (Jan – Jun; since 9 Nov 2011); 9.7% excl. Scania and MAN. Porsche AG fully consolidated as from 1 August 2012 8 World car markets and Volkswagen Group deliveries to customers1) January to September 2012 vs. 2011
World: Car market: 7.9% VW Group: 9.7% North America Western Europe Central & Eastern Europe Car market VW Group Car marketVW Group Car market VW Group Cars + LCV 25.3% 23.1% 13.5% 9.4%
-2.8% -7.6% South America Rest of World Asia Pacific Car marketVW Group Car market VW Group Car market VW Group 20.9% 17.9% 13.5% 7.6% 4.8% 7.3%
1) Preliminary figures incl. Porsche (since 1 August 2012); excl. Scania and MAN 9 Volkswagen Golf VII: Launch of a new era Hans Dieter Pötsch Member of the Board of Management, Volkswagen Aktiengesellschaft Sardinia, 8 October 2012 Golf VII – a cornerstone in our Strategy 2018 Sustainable growth combined with sustainable profitability
Growth market focus Increased market penetration Potential upside Modular toolkit strategy Product portfolio extension 1 Emerging markets expansion Reduction in investment, North American expansion Balanced global footprint development and unit costs and market recovery Scale and efficiency effects Commercial vehicle strategy 6 Leading in 2 Increased production flexibility and market recovery customer satisfaction Reduced time to market Financial Services: strengthen and quality the automotive value chain Volkswagen Group profit Top employer before tax margin > 8% Capital discipline Volumes > 16% RoI target in > 10 million 2) automotive business Synergy potential units p.a. 20% RoE1) goal in Leveraging best practices 5 3 Financial Services across the Group Operating profit measures Around 6% automotive capex Purchasing, production, and Strong cost control in PPE/sales distribution benefits 4 Process/product optimization Regional scale effects
1) Normalized RoE based on 8% equity ratio 2) Including China Note: All stated Volkswagen Group figures represent financial targets for 2018, excluding Porsche and MAN 11 The Golf – a reliable contributor to Volkswagen‘s success More than 29 million Golf deliveries to customers since 1974
1974 Golf I 1983 Golf II 1991 Golf III 1997 Golf IV 2003 Golf V 2008 Golf VI 2012 Golf VII
Deliveries to customers1) (´000 vehicles) (% of Group deliveries)
30% 800
600 20%
400 10% 200
0 0%
1) includes Golf Hatchback, Station Wagon, MPV, Cabrio 12 The new Golf sets the benchmark in terms of efficiency and sustainability
130 5.0
120 4.5
110 4.0
100 3.5
emission g/km 90 3.0 2
CO 80 2.5 Fuel consumption l/100km 70 2.0
CO2 emission g/km Fuel consumption l/100km 13 Strong position in Europe and substantial growth opportunities for the Golf in key sales markets Market shares of the Golf* in 2011
> 6 % 4-6 % 3-4 % 2-3 % 0-2 %
* includes Golf Hatchback, Station Wagon, MPV, Cabrio 14 Introducing premium features in the volume segment 2012 Golf VII
Multicollision brake Speed limiter Front transverse diff. lock Touch with proximity sensing Progressive steering Automatically folding mirror LED fog lights PreCrash Park Assist 2 2008 City Emergency Braking Fatigue detection Golf VI Traffic sign detection Park Pilot Navigation touchscreen Dynamic Light Assist Knee airbag Lane Assist Park Assist Front Assist Damper control DCC Adaptive Cruise Control 1974 Common rail TDI Electric parking brake Dyn. cornering light Driving profile selection Golf I Reversing camera Cylinder deactivation Automatic Stop/Start Deluxe climate window Battery regeneration Panoramic tilt/slide sunroof Front-wheel drive Hill hold assist Ergonomic seats Transverse engines LED rear lighting Run-flat tyres GTI KESSY Ambience lighting
15 More value for money… Driver assistance systems and vehicle dynamics available for all vehicles based on MQB
PreCrash 360°Park Pilot Park Assist 2 Sign Assist Fatigue detection
Adaptive Cruise Control Lane Assist City Emergency Breaking Multicollision brake
16 Leveraging economies of scale: One standard across the brands and segments
Common technology but individual surface and controls to Modular Infotainment Toolkit safeguard brand differentiation Modular Infotainment Toolkit to be used across all segments, also in New Small Family class as well as Trucks and Buses
A0 A B C D E High/Premium MSB
Standard MLB
MQB / Entry PQ
1) MQB: Modularer Querbaukasten / modular transversal toolkit; PQ: Plattform Quer / transversal platform; MLB: Modularer Längsbaukasten / modular longitudinal toolkit; MSB: Modularer Standardbaukasten / modular standard toolkit 17 Intuitive and high quality infotainment systems for everyone’s taste and budget
High-quality display Multitouch: Gesture control in operating the touchscreen Cover flow for selecting media Display size up to 8“
Situative touchscreen (STS) Proximity sensors detect the user‘s finger or hand and then automatically switch from display mode to operating mode Detailed information display in display mode Safe and convenient user operation in operating mode
Easy operation Well laid-out and intuitive user menus Capacitive touchscreen: Low touch pressure Large MIB display makes controls easy to operate and enables individual settings for all vehicle & driver assistance systems
18 Moving profitability to a higher sustainable level
Increasing operating profit
Higher avg. revenues per car Lower material costs per unit through better equipped vehicles Lower engineered hours per vehicle Operating profit Lower one-off expenditure Economies of scale RoI = Invested capital Disciplined management of investment capital
Shorter development Less investments in tooling times per car through high standardisation Limited one-off expenditure
RoI in the Automotive Division 17.7 Best in Target class >16 % 13.5 10.9 9.5 9 % 3.8 2.9 5.8 … 2005 2006 2007 2008 2009 2010 2011 2018
19 MQB Toolkit: Driving forward significant economies of scale in unit cost and investment
MQB1)
…
Audi A3 Volkswagen SEAT ŠKODA Golf Leon Octavia
MQB provides substantial efficiency gains Toolkit affords Reduction of unit costs Flexibility in length, height, width Lower one-off expenditure Significant economies of scale Less engineered hours per vehicle Regional variations Significant weight and emission reduction Opportunity for low volume niche models Alternative powertrain concepts
1) MQB: Modularer Querbaukasten / modular transversal toolkit 20 Modularisation of production material Example: Underbody framer
Production materials
Geometric supports Module base plate
Module moving unit
Module part supports Golf Tiguan Passat
New moving systems allow the realisation of different models and wheelbases from the Golf to the Tiguan to the Passat
21 Modularisation of production systems Example: Body construction
Production systems
Area for potential 30 vehicles / h Basic module with expansion in 30 vehicles / h for basic layout 1 vehicle type one vehicle type included
60 vehicles / h Expanded … and two basis module vehicle types 2 vehicle types with 60 vehicles / h
The modular production system (MPB) builds in flexibility in production systems regarding quantity, degree of mechanisation and vehicle type
22 Higher flexibility in production through standardisation Example: Turntable concepts
Utilisation of concept within plant … … and across brands and locations
Body shop vehicle type 1
Body shop vehicle type 2 Polo Golf Octavia Body shop vehicle type 3 Golf Body shop vehicle type 4 Tiguan A3
Fully flexible body shop Octavia Polo for all 4 types
Enhanced flexibility to better react to fluctuations in customer demand
Production plants 23 Flexibilisation through standardisation Example: Flexible gripper in the body shop
Today: single-use tooling MQB: flexible tooling
gripper 1 Line 1
1 flexible gripper 2 Line 2 gripper 1 line
gripper 3 Line 3
Improved flexibility in assembly and savings in tooling
24 Unification of powertrain installation positions: Considerably reducing number of variants and complexity
Rotation of Powertrain 6 generations of Golf Golf 7 (MQB) cylinder head installation positions Petrol engines All engines Number today
Exhaust line
Diesel engines Drive shaft -88%
Gearbox
Gearshift MQB
With the MQB all engines receive a uniform assembly position Considerable reduction of the number of variants and the complexity by using the modular assembly strategy
25 The MQB‘s flexible design is able to accomodate alternative drives
Conventional drive Alternative/Regenerative
TSI Gasoline EcoFuel EA211 CNG Electric drive
TDI Diesel E- FlexFuel Plug-in EA288 Drive Ethanol
26 Economies of scale through utilisation of MQB Example: Modular transverse members
Golf VI Golf VII
– Higher initial investment + Higher order volume + Lower price per unit
Higher initial investments amortised in the first year Savings invested in higher quality cockpit and content Initial Annual Cost Net weight capex volume per unit
27 The new Golf: up to 100 kg less weight than its predecessor Use high-strength & advanced high-strength steel -37kg Superstructure* grades (HSS) and reduce sheet thickness
VI Hot formed -26kg Running gear* VII Hot formed steel Advanced HSS -22kg Engine* Steel Adv. HS steel Ultra-high-strength steel, hot formed
-12kg Special equipment* Only use material where it is needed
-3kg Electrical* Optimise geometries of profiles and surfaces
* Model-dependent 28 Reduced build times through high standardisation and more efficient production
Build time* in h
30
~15% 20 ~30%
10 Golf V Golf VI Golf VII
0 2006 2007 2008 2009 2010 2011 2012
* Build time (blue line): press shop, body shop, paint shop and assembly line 29 Roll-out of MQB production across the Volkswagen Group
Production MQB investments in m units Volume in units 2012: < 0.1 m (left scale) 2014: ~ 2 m 8 2016: > 4 m
More than 40 models will be 6 … based on the MQB until 2018
4 The ramp up phase for a new model decreases substantially 2 Significant up-front investments 0.1 will pay off in the long run 2012 2014 2016 2018
30 MQB helping to improve product and margins Material costs 100 % Distribution of savings
Hat Additional serial and optional content, Margin ca. 40% previously reserved to premium class improvement
Potential savings Savings to be partly MQB absorbed to fulfill platform Lower cost per unit regulatory and legal requirements: ca. 60% Less EHpV1) EURO 6 Less one-off expenditures Pedestrian protection
Savings Profit Expenditures Invest 1) Engineered Hours per Vehicle 31 Introduction of whole Golf family within two years Worldwide roll-out in more than 140 countries
Golf GTI E-Golf
Golf GTD Golf natural gas (CNG) Golf BlueMotion Golf R-Model
Golf R-Line Golf Special Models Golf Plus
Golf hatchback Golf Variant Golf China Golf Plug-In Hybrid
2012 2013 2014
32 The Golf VII: Strong operating profit improvement Analysis of profitability1) Additional Operating Profit serial 2) One off EHpV content € Unit expenditures Raw Currencies/ costs materials Other
Volume
Golf VII Golf VI
1) Schematic Overview 2) Engineered Hours per Vehicle 33 Golf VII – a contributor to every element of our Strategy 2018
Strong market position in Western Europe and substantial growth 1 opportunities across the world Other Golf derivatives to be Reduced build times through launched within short time high standardization and High quality and well equipped 6 Leading in 2 more efficient production customer Attractive financing packages satisfaction and quality Volkswagen Group profit Top employer before tax margin > 8% Volumes > 10 million Driving forward significant 1) units p.a. Moving profitability to a economies of scale in unit higher sustainable level costs and investments 5 3 through the multi-brand approach Higher average sales revenue per car 4 Improved cost structure
1) Including China Note: All stated Volkswagen Group figures represent financial targets for 2018, excluding Porsche and MAN 34 Volkswagen Golf VII: Launch of a new era Volkswagen Golf VII: Launch of a new era Prof. Dr. Martin Winterkorn, Chairman of the Board of Management Hans Dieter Pötsch, Member of the Board of Management Volkswagen Aktiengesellschaft Sardinia, 8 October 2012